One aspect of the strong performance for the S&P 500 Index so far this year has been the outperformance of the defensive market sectors. As the below chart details, the top performing sectors this year are health care (20.5%), utilities (18.8%), consumer staples (17.8%) and telecommunications (15.3%). A notable characteristic of the defensive sectors is their higher dividend yields. With the near zero interest rate environment being perpetuated by the Federal Reserve, investors seem to be allocating some of their investment dollars to these higher yielding stocks and sectors.

From The Blog of HORAN Capital Advisors

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Last week though saw a shift in which sectors were contributing to the market moving higher. As the below chart shows, the previously mentioned sectors that contributed to the positive market move on YTD basis were the worst performing sectors last week. Telecommunications, consumer staples, health care and utilities all were the worst performers. The more cyclically sensitive sectors performed the best: financials, materials, technology and industrials.

From The Blog of HORAN Capital Advisors

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A characteristic of the defensive sectors at this point in time is they are trading at higher P/E multiples relative to the S&P 500 Index. The utilities, staples and health care sectors are each trading at multiples of near twenty times earnings or higher.

From The Blog of HORAN Capital Advisors

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For investors, keep in mind that stocks/sectors will trade on future earnings growth prospects. Factset's earnings summary report released on Friday does show the sectors with the best anticipated earnings growth in 2014 are the more cyclically exposed sectors and not the defensive sectors that have worked so well for investors this year.